Military by Owner; By Danielle Keech
Budgeting creates financial accountability. It allows us to track spending money while ensuring that we have enough money to cover our needs like housing, food, bills, retirement, and college tuition for our children. Without a well-planned budget, we lose financial security and confidence that we can afford the things we need, much less the things we want.
As military families, our budget needs to be revisited fairly frequently. Every time we receive orders to PCS, we can expect our finances to change. There are many variables that affect how much money comes and goes, we’ll need to adjust our budget to accommodate the fluctuation.
1) Selling your house. If you plan to sell your home before you PCS, you can expect to see a large change in your finances.
You’ll need to consider the cost of repairs, a home inspection, legal fees, marketing costs, and real estate fees, if you choose to hire an agent. If the market looks good and you’ll profit from selling your home, you’ll need to decide what you’ll do with the extra income.
Consider things like expanding your savings, increasing your retirement investments, supplying your child’s college fund, or putting the money toward a home at your next duty station.
2) Renting out property. If you own your home and want to rent it out, you may have the opportunity to make some money. Consider BAH, comparable listings, and the housing market in the area, and decide what a fair asking price is for your property. Then determine how much you’ll profit after paying your mortgage, property tax, etc.
You’ll also want to consider expenses like hiring a property manager, advertisements, and maintenance costs.
3) Getting your deposit back. Rental properties usually require a security deposit, and sometimes a number of months’ rent in advance.
However, many deposits are refundable, so if you took care of the property during your stay, you’ll likely see your full or partial deposit returned to you.
4) Moving allowances. A few of the government supplied allowances include Dislocation Allowance, Temporary Lodging Expense, Per Diem, and mileage rates. There are a few more you might be entitled to when you move OCONUS.
When you receive PCS orders and file your move appropriately, these allowances become available to you. A portion of them may be given prior to your move, however, the majority is provided as a reimbursement after you arrive at your next duty station.
As you budget for your PCS move, take these allowances into consideration. Since some purchases you make will be out of pocket initially, you’ll want to make sure you can afford the expense up front.
Sometimes the reimbursement will take weeks to reach your bank account, so make sure that you budget for travel expenses and a month or two of living at your new duty station.
5) Setting up a rental home. A budget for a security deposit, pet deposit, a number of months rent in advance and setting up utilities.
Each state has different laws regulating how much landlords can require up front for a rental property. If this is something you’re concerned about, you can check out your state’s laws prior to your move and budget for the appropriate amount as you begin your house hunt.
6) Buying a house. Buying a house is a huge expense. If you decide that you want to buy at your next duty station, you need to consider what your new BAH is, what type of mortgage you want, and ultimately what you can afford.
If you own your current home and plan to rent it out after you PCS, can you afford to pay two mortgages? Ideally, your tenants will help cover the cost of your rental home, but you need to think about whether you can afford for it to sit empty for a couple months if there’s a gap in tenancy.
7) Travel expenses. As you budget for your PCS move, anticipate the cost of gas, lodging, food, and unexpected expenses. You should plan for the allowances covered earlier, but know that some purchases you make will be out of pocket initially. So you’ll want to make sure you can afford the expense up front.
If you plan to move yourself DITY or PPM (Do it Yourself or Personally Procured Move), you’ll need to budget for the cost of a rental truck and the cost of moving related supplies. Though you’ll see reimbursement, the bulk of these expenses will be up front.
8) Insurance fluctuations. Insurance regulations fluctuate from state to state, so it’s not uncommon to see car insurance rates change after you PCS. Give your provider a call after you move to update your address, and they’ll provide you with your new monthly rate.
For more tips to help with your next PCS, take a look at MilitaryByOwner’s relocation and moving resources.